Thursday, 7 April 2011

I dropped by my accountants’ office and had a word with the lead partner earlier this afternoon. He was surrounded by files and tax declarations and had a resigned look on his face. This is what he told me:

The Ministry of Financeonly recently activated the MOF website for personal tax declarations. By recently, he means about 2 days ago, and the site is still beset by bugs and slowdowns. This is despite the fact that personal taxes can be filed since February.

He was wondering how the Ministry expected to address the deficit if there was a 2-month delay in getting the website operational for tax declarations. His office alone (2 accountants) had over EUR 250,000 in personal income tax ready to submit.

To make matters worse, he showed by a folder full of bank cheques (money orders) for tax payments from his clients. In the absence of a functioning website, the Ministry issued a circular stating that individuals can submit their tax declarations in person at the Tax Offices (ΔΟΥ), using a paper-based form and a banker’s cheque.

So he’s been going to the tax office for the past 2 months, but the staff there refuse to accept either the tax declarations, or the payments. They say “We are not responsible for this–you have to submit through internet.” No matter that a circular has been issued. My accountant suspects it’s because the staff at the Tax Office would have to manually enter the data on each form: this takes 3-4 minutes per form.

He also said that the MOF had still not issued instructions on collecting the 2009 real estate tax, or the 2010 tax on large real estate holdings. The value of these taxes are extremely high, and in a period of deficits, he was understandably wondering why they just didn’t go ahead and start collecting these taxes.

His conclusion:

a.Despite the fact that Greece is in an unparalleled financial crisis, the front-line staff of the Ministry of Finance—the Tax Office—are well-paid civil servants in permanent positions who basically don’t give a damn about doing their jobs professionally or looking after the good of the country.

b.That as long as this mentality exists, whatever promises Greece makes to the Troika will be impossible to keep.

I can’t say I can find anything in this conclusion to disagree with. I’m just wondering why nobody does anything about it.

Wednesday, 6 April 2011

Greek public television channel NET aired a programme called “Ανταποκριτές“ (“Correspondents”) yesterday night dedicated to the conflict in Libya. The guests included NET’s correspondents in Libya and Egypt Panos Haritos (who covered both events) and Giorgos Alpogiannis.

The segment led off with an interesting statement, which I translate and summarise here:

“The first symptoms of the manufacture of news occurred three weeks ago, when we arrived in the town of Ras Lanuf. We were informed that Quaddafi’s forces were about to attack Brega, about 100 km behind us. Since this would have left us exposed on the front line, we got back in the car and returned to Brega. Colleagues in Benghazi informed us that international media were reporting that Brega had fallen to Quaddafi, and that his air power had played a major role in the attacks. I told them that we were in Brega: the situation was calm, the rebels were there, and that what I was reporting was in front of me.

Brega certainly did not fall that day. However, on that day, the UN Security Council began the imposition of a no fly zone on Libya.

On March 19th, another incident took place. A large media channel reported that Qaddafi forces were attacking Tobruk during the night. After hard fighting in the early morning hours, the town was recaptured by the rebels. Together with my colleagues at the hotel [in Tobruk], we waited to hear a reconfirmation of the news, because we didn’t believe our ears. Tobruk was taken and recaptured in an all-night battle, which none of us heard.

On March 22nd, the following digital video footage was released, showing a Grad rocket attack on Benghazi. The foot was purportedly taken from the cell phone of a Qaddafi soldier, killed in the air strikes of March 19th. Where this was filmed, we cannot tell: it could be anywhere. What is certain is that Benghazi was attacked with mortars, tank guns, anti-aircraft guns and automatic weapons. Grad missiles were never used against Benghazi. If they had, buildings would have been levelled, and the city would have looked like Grozny in the second half of the 1990s.”

Obviously, I am in no position to confirm their statements. The fog of war means that inevitably mistakes will be made by journalists and generals everywhere. I therefore won’t repeat or endorse their conclusions about the Libyan conflict, although I believe they are worth listening to. Unfortunately, NET does not publish archives, but you can see the introductory fragment of the show on Youtube for as long as it remains posted there.

What I will do here is list some of my own impressions of this conflict:

·The alacrity with which France and then the UK determined that Qaddafi “must go” was remarkable, and in great contrast to their responses in other cases.

·During the critical time period when it was reported that Qaddafi was “massacring” Libyan civilians there was no footage such massacres or their aftermath, in contrast to Rwanda, Srebrenica or Kosovo, and despite the presence of hundreds of journalists on the ground.

·The evidence on which the Security Council decision to impose a no-fly zone on Libya (on the basis of a humanitarian intervention to prevent a dictator attacking his own people) has never been publicised.

·During the entire conflict, I have yet to see TV footage of a “pro-Qaddafi” military-strength formation in action. This is despite the hundreds of Western journalists and TV crews embedded on both sides of the conflict.

·Apart from the release of the Lockerbie bomber Abdel Basset al-Megrahi, the United States, the United Kingdom, France, Italy and a range of other countries have had nothing but praise for Muammar Qaddafi recently. A US diplomatic cable leaked by Wikileaks (and published in the Asia Tribune) describing a 2009 meeting between Senators John McCain and Joseph Liebermann describes this relationship:

3.(C) Characterizing the overall pace of the bilateral relationship as excellent, CODEL McCain opened its August 14 meeting with National Security Advisor Muatassim al-Qadhafi by noting the drastic change that the relationship had undergone over the last five years. "We never would have guessed ten years ago that we would be sitting in Tripoli, being welcomed by a son of Muammar al-Qadhafi," remarked Senator Lieberman. He stated that the situation demonstrated that change is possible and expressed appreciation that Libya had kept its promises to give up its WMD program and renounce terrorism. Lieberman called Libya an important ally in the war on terrorism, noting that common enemies sometimes make better friends. The Senators recognized Libya's cooperation on counterterrorism and conveyed that it was in the interest of both countries to make the relationship stronger. They encouraged Libya to sign the Highly Enriched Uranium transfer agreement by August 15 in order to fulfill its obligation to transfer its nuclear spent fuel to Russia for treatment and disposal. [Note: The Libyan Government subsequently informed us of its intent to sign the agreement on August 17 and has begun taking good-faith steps to do so

·According to The Telegraph(24.11.2010), it appears that BP has influenced the al-Megrahi prisoner release in the influence of a Libyan deepwater oil deal. BP signed a $ 900 million exploration and production deal, initially believed to be worth $ 20 billion. Since the initial deals, however, progress in oil development has proved slow. As reported in the Financial Times(23.08.2010):

Recent exploration efforts have, however, proved disappointing and have dented the optimism that accompanied the return of international oil companies to Libya after the final lifting of sanctions in 2004.

“We are coming up to the end of a five-year period where there has not been a lot of notable exploration success to point to,” said Ross Cassidy, Libya analyst at Wood Mackenzie, the oil consultancy. “Results have been poor when you compare with what was expected and hoped for.”

Big oil companies piled into Libya, competing for blocks in four licensing rounds held between 2005 and 2007, lured by the promise of an under-explored country that has the largest proven oil reserves in Africa. So far they have little to show for their huge investments in recent years. Offshore, only Hess reported finding hydrocarbons that can be developed commercially, in its Arous el Bahr well.

·There is no apparent exit strategy for this conflict. The fact that Muammar Qaddafi is not being actively targeted, and that a future political settlement may include both a rebel-held territory in the east and a pro-Qaddafi territory in the west, makes little sense on ethical or humanitarian grounds. It may make some sense in looking at the map of oilfields in the previous point.

·NATO is a military and political alliance which historically and traditionally has been developed for the defence of Europe. None of its Member States face a material threat from Libya. It’s involvement in this conflict, apart from its obvious capabilities, is questionable.

I do not have an opinion as to who is right or wrong on the Libyan invasion; nor do I have evidence of a conspiracy or anything else which might explain things. Whether Libya was invaded to save Libyan civilians or President Sarkozy’s poll ratings or BP’s oil leases is unknown to me. Certainly, I am no supporter of Colonel Qaddafi, and have no business interests in Libya.

What I am certain of is that this intervention is one of the strangest I’ve seen in the last 20 years. Together with the 2003 Iraq invasion, there appear to be a confluence of motivating factors which are perhaps only tangentially related to the supposed cause of protecting civilians from Qaddafi’s air attacks.

Where this leaves a world struggling to deal with vital issues of human rights, national sovereignty or the rule of law is beyond my capacity to understand. The logical and legal conflicts of interest in this case are self-evident. As more and more such precedents build up (Kosovo, Afghanistan, Iraq, Libya), it becomes painfully apparent that these will be used or misused in the years to come.

And at the end, it appears that only one rule remains: that of survival of the fittest. Colonel Qaddafi and his oil and arms contracts were feted in Paris, London, Rome and elsewhere for years. In February-March 2011, he was apparently no longer sufficiently useful, and Libya was invaded under the guise of a no fly zone. Where this adventure will end, and what consequences it will have 5 or 10 years from now, remains to be seen.

Monday, 4 April 2011

The first is that the Athenian Brewery, the brewer which produces Heineken and Amstel in Greece, and the company which the New York Times improbably cast as the villain in a recent article on entrepreneurship in Greece, was voted the best place to work in Greece in a survey implemented by the ALBA Business School. Re-reading the NYT article, I was struck again by how outlandish the claims are. Evrypides Stylianides, a former ND minister, is quoted as giving the example of a Greek law giving donkeys the right of way on Greek roads.

Memo to Mr. Stylianides, and to the NYT: I have never seen a donkey claiming the right of way on Greek roads. If you do, I suggest you use your own considerable good judgement on how to proceed.

Waste

The second is the order given by the Interior and Environmental Ministries to regional administrations to—once again—close 63 illegal landfills by June. The story of landfill closure is a recurring one, since a modern integrated waste management system based recycling of organic and inorganic waste does not exist anywhere in Greece. The result is that landfills are “buried”, but then new sites started in remoter areas. We see this quite often driving through Boetia and FokithasPrefectures.

Reading this article, I had to ask myself, given these headlines, how this new order, together with the continuing chaos in Keratea over the waste disposal site there, reflected on Prime Minister Papandreou’s plans for the Mediterranean Climate Change Initiative.

“But change will be difficult,” I hear his supporters admonishing me. “Rome wasn’t built in a day. The journey of a thousand miles begins with a single step.” This is no doubt true. But the fact of the matter is that even today, there are no steps being taken for an integrated waste management / waste disposal site anywhere in Greece. Such a site would include:

·A medium-scale recycling facility, which would serve industrial customers by selling waste paper, glass, plastic and various metals (mainly aluminium). There is sufficient industrial demand within Greece for these products; there is also major demand among export customers.

·An organic waste treatment facility, which would turn organic household waste into compost and energy through biogas. This energy would either be sold into the municipal grid, or used to power the recycling facility, depending on output.

·A municipal-based recycling collection network, enabling the recycling plant to be located in close geographic proximity to the waste production and collection points.

The main problem, of course, is that household and municipal recycling remains a government monopoly, and remains based on inorganic waste. There is only one state-owned recycling company in Athens, for instance, which has signed exclusive contracts with most municipalities. Yet there is no economic reason for this, particularly when we see just how inefficient the waste collection and treatment system is.

The number of “green” garbage skips which are for general garbage, for instance, far outnumber the “blue” ones which are for general recyclable materials. (There is no primary separation at the point of collection on a wide scale; there are very limited collection points for glass bottles, paper and aluminium, which do not begin to meet demand). On several occasions, I’ve seen municipal garbage trucks adding the recyclable skips to their loads, together with the organic refuse. The recycling truck rarely comes by most neighbourhoods: the skips are constantly full and overflowing.

All this points to a latent demand for recycling. The quickest and surest way of meeting it is not to expand yet another inefficient public enterprise, but to license private sector operators for municipal recycling on a planned basis, allocating a number of operators per specific geographic areas in a first phase, and then allowing proper competition in a second phase. This would require a change in zoning laws, as well as the possible provision of public land. But there is no reason this could not take place within 6 months, if the political will were in place. This would not only create employment and attract investment, but would go a long way towards allowing Greece to comply with EU environmental regulations–which it has signed, but never implemented.

Perhaps after the first baby steps towards modern waste management have been taken, the Prime Minister could return to the Mediterranean Climate Change Initiative and purport to give other countries a lesson in how to save the environment.

Sugar

On the other side of the ideological spectrum, To Vima reported on Sunday that the Hellenic Sugar Industry (EBZ) was finally being put up for sale by the state-owned Agricultural Bank of Greece. According to “Vima”, EBZ has seen losses of EUR 84.05 mln since 2005, and this year faces a further loss of EUR 10 mln in the best case scenario. It employs 424 staff (far more than would reasonably be expected) and purchases sugar at EUR 41/tonne, versus EUR 32 in the “rest of Europe.” Part of this cost difference comes from the fact that it grants seeds and pesticides at 20% below cost to its network of 6,000 families involved in sugar beet cultivation. EBZ apparently sells refined sugar at EUR 800/tonne, versus a European market price of EUR 600 per tonne.

EBZ appears to be yet another one of hundreds of inefficient state enterprises and organisations which remain funded or subsidised by the Greek government, and thus the taxpayer (as well as various international creditors). It would really be better for all involved if both the primary production of beets were restructured (or the fields replanted), and domestic refining stopped entirely, at least at current commercial practises.

The domestic market price of refined sugar at EUR 600/tonne is a protectionist measure for European farmers established by the EU’s Common Agricultural Policy. The 2010 average world price for white refined sugar, Europe FOB using spot prices, was about $ 609/tonne, or EUR 470 per tonne. But import tariffs meant (and still mean) that that same sugar which you buy at EUR 470/tonne could not be sold at less than EUR 600/tonne in the European market. And EBZ doesn’t produce it for less than EUR 800/tonne, nearly twice the market rate.

If Greek sugar beet producers are producing at EUR 41/tonne versus a European price of EUR 32/tonne, and if the cost of refined sugar is EUR 200 more per tonne than the EUR 600 market price, then there is no way this boondoggle is every going to make money.

The sale of EBZ should be done as soon as possible: alternatively, it should be liquidated. The sale of the Agricultural Bank of Greece should occur as soon as possible as well.

I am sure some people will ask: but what about the 424 staff at EBZ? What about the 6,000 families producing sugar beets? My answer is that we—the taxpayers and consumers in this country—are already paying for their lack of competitiveness through a high sugar price and Common Agricultural Subsidies and who knows what other direct or indirect subsidies. In the previous 6 years, EBZ has run up EUR 84 mln in debts—nearly EUR 200,000 per worker.

If they can’t survive despite all this aid, then they should find another job to do, and fast. One would hope that the job of the government isn’t to bankrupt a country on behalf of a series of small special interest groups. This is precisely the type of industrial logic which has led Greece into a EUR 340 bln debt, and we can no longer afford it.

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